Which business type is owned by shareholders and operates under legal guidelines?

A corporation is a business type that is owned by shareholders, which means that individuals or other entities hold shares in the corporation and have a claim on part of its assets and earnings. This structure allows for the raising of capital through the sale of stock, thereby enabling the business to grow and invest in new opportunities.

Additionally, corporations operate under specific legal guidelines defined by state and federal laws. They are required to adhere to regulations regarding taxation, reporting, and governance, which includes holding regular meetings, maintaining detailed records, and filing annual reports. This legal framework provides protection to shareholders, limiting their liability to the amount they have invested in the company, thus safeguarding their personal assets from business debts.

In contrast, sole proprietorships are owned by a single individual who has complete control but bears all legal and financial liabilities. Franchises are agreements that allow individuals to operate a business under the branding of an established company, while partnerships involve two or more individuals sharing the ownership but usually without the legal protections provided to corporations.